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Thursday, February 10, 2011

Notes on The Coca-Cola (KO) Call ...

The following are some of the notes that I briefly wrote down during the conference call for Coca-Cola (KO) on Tuesday morning. Coca-Cola (KO) earnings tripled this quarter. From these notes, I dive into my own research ...

  • Volume and Sales up markedly even in markets considered saturated, such as North America. Just some highlights ... brand flagship Coca-Cola drink up 4% for both the quarter, best full year in a decade for flagship brand. In 2010, first year of the "2020 vision", met and exceeded all targets for 2010. In 2010, inorganic volume grew 6% in the quarter, grew global volume 5%, delivered over 1 billion cases of inorganic volume growth, "equivalent to adding another Japan to our business". Later on, during the Q&A , after an analyst congratulated management on a "pretty good year" ... "If this was a pretty good year ... I'd like to see what a really good year looks like" - Gary Fayard. I personally liked that one.
  • Eurasia and Africa: Some highlights ... up 14% fourth quarter, 12% for the full year across these regions. Brand Coca-Cola up 12% for the quarter, and 10% for the full year. Led by Russia is up 31% this quarter, and 16% for the year. Brand Coca-Cola up 37% for the quarter, in Russia and 26% for the full year. Cautious about economic conditions in Japan, though sales up. In China, for the full year, growth of 100 incremental unit cases, seventh consecutive year of incremental unit case growth. Two year compounded annual growth rate in China is 11%
  • Bottler investment group up markedly. They are trying to make sure their bottlers succeed on an individual basis; which they look to build on. They are aligning to incentive structures to where they want to be in 2020. Not on a quarter by quarter basis for structures.
  • Was not, but now actively hedging commodity exposure as have hedged currency in past ..
  • On modeling the pricing strategy ... plan to hedge aggressively enough so that pricing is not impacted negatively, although pricing will be positive ... "Pricing to be rational, in terms of competition yes, but also focus in terms of the consumer. " They're not following commodity prices volatility, but in terms of passing positive pricing that is rational to the consumer. So "don't expect to see pricing decrease if commodity prices go down, or up if they are up" ... it's a model. This is all relative to North America as well. Outside of North America , there are very different market dynamics and inflation rates, and different answers, because they are viewing pricing on a country by country basis; with different inflation rates, etc. Their view is that yes, on a longer term with rise of middle class, there will be upward trend on commodity prices; but that is taking account to huge volatility due to climate problems, crop problems. (I swear, some of the analysts ... it's as if they don't understand how a commercial interest in the commodity markets view commodity swings)
  • Expect currency to be positive in the future ...
  • Some analysts during Q&A worried about growth being sustained ( obviously, didn't listen to previous comments on multi-year goals and their management thusfar )
There was also the Pepsi Co. (PEP) call earlier today which I caught, but I decided to include the notes on the KO Call, since that's what A.C.C. and the Challenge Project hold. On the Pepsi (PEP) call, there was a lot of conversation regarding the inflation rates that PEP is seeing as a producer (8 to 9 1/2 percent); so I recommend checking it out ...

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Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk

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